In the US is it common for financial institutions to ask for a copy of your ID for verification purposes?

I opened a line of credit with a financial institution for a small home renovation project. The loan has been approved but to process the payment to the service provider they are asking me to send them a copy of a valid government ID. Is this common practice? first time I hear about it. I'm not comfortable with it but seems to be the only way to verify my identity

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